Malloy's 2-year budget nearly $41 billion

Ken Dixon

Published 12:12 am, Monday, February 4, 2013

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Malloy's two-year budget proposalAdds about 40 bioscience researchers at the UConn Health CenterNearly retains current levels of municipal aidConsolidates the current 60 state departments into 53 for a savings of $4.9 millionCuts several hundred million dollars in Medicaid expenditures while limiting impact on eligibilityPuts an additional $450 million into the pensions and health benefits of retired state employees and teachersInvests an additional $380 million into human services

Revenues have failed to meet projections, and the lingering deficit in the current budget, even after unilateral cuts from the governor and further reductions by lawmakers, has ballooned to $140 million in the current $2.5 billion budget.

A deficit of more than $1 billion looms in the next fiscal year, which starts July 1.

But the two-year, nearly $41 billion budget that Malloy will present to a joint session of the House and Senate on Wednesday would keep municipal aid at just about current levels.

The budget would slightly increase overall spending and continue investments in public schools and higher education, although not as much as Malloy would like.

Spending reductions would come with the consolidation of Medicaid low-income health programs and the extensions of cuts that Malloy ordered last year and were later approved by the Legislature during a special session in December.

As much as $1.8 billion in long-term bonding would be invested to expand science programs at the University of Connecticut's main campus and the Stamford branch. Malloy hopes this initiative will return big dividends and make the university a top-10 public institution.

"We're going to go after the best students," Malloy told reporters Friday. "This is about the future and competing. ... There's a lot of education in this budget."

The 80 state agencies that were reduced to 60 in Malloy's first budget in 2011 would be cut and consolidated even further to 53 agencies in his new budget. The reductions would generate about $4.9 million in savings.

"There are no new taxes in this budget," Malloy said. "There's enough pain to go around in this budget. And those are just broad strokes."

Malloy said he has looked at opportunities to provide middle-class tax relief, but called these openings "few and far between" in the balanced budget he will offer "with no tax increases."

However, the governor has hinted that taxes scheduled to end, such as a surcharge on electric generators, could be extended and he would not consider them new taxes.

"In general, the budget is balanced without new taxes or tax increases, and it's under the spending cap in both years," said Barnes, right around the time the multi-volume proposal was heading to the printer.

"Many of the savings, which were intentionally made to end June 30, we're proposing that they continue forward. We are making quite a number of difficult decisions in order to fund our priorities and the things we have to do."

Ojakian said last year's education package was ambitious, and while the overall financial picture is under a shadow because of reduced revenue, reforms will go forward.

Barnes said the budget continues the complicated, expensive transition of state finances to General Accepted Accounting Principles that will cost an additional $1.2 billion over the next few years.

He said that overall, obligations and policy priorities are the main drivers of the governor's budget, including a $450 million increase in the growth of teacher and state employee retirement and health benefits.

"Paying that, and making a full and complete payment of that in the long run, is the most economical way to deal with those obligations," Barnes said.

Human service expenditures, the result of case load increases among people with developmental disabilities, along with the federal Affordable Care Act, known colloquially as Obamacare, would increase by about $80 million.

Overall, the budget for people with developmental disabilities, who require expensive, labor-intensive attention, would be about $1 billion a year.

Medicaid benefits for low-income people under the ACA will require more state funding beyond $380 million that would be eligible for federal reimbursement.

Barnes said that Malloy's bioscience commitment will continue, including adding 18 or 19 new researchers in each year of the budget at the UConn Health Center.

"We're continuing to fund education reform, so we're rolling out all the major pieces of the education reform put together a year ago: the Commissioner's Network schools, charter schools, teachers' evaluation, all the major pieces," Barnes said. "We think we're making meaningful progress on education reform."

On municipal aid, Barnes said the budget would "keep municipalities from having to cut services or raise taxes because of cuts in municipal aid."

Asked whether Malloy would retain current levels of local aid, Barnes said, "It's a little bit more complicated than that, but we're going to try to get as close to that as we can."

Ojakian declined to reveal the bottom line of the two-year proposal, saving that for Wednesday.

"There's going to be a marginal increase in spending," Ojakian said. "Some of the things we're doing will end up saving the state of Connecticut billions of dollars in the long run."

"It's a current-services budget in some respects amongst our priorities, but there are other things we have to cut because we need to prioritize," Barnes said.